O Options Trader, Know Thy Vehicle

In yesterday’s Options Tribe meeting, tribe member Craig Wassenberg made an excellent presentation of his expiration Friday “pinning” trades. (For those of you who aren’t familiar with the term, a pinning trade is a trade that takes advantage of the tendency of certain stocks that become anchored to a particular options strike price on options expiration day.) It was an outstanding … Read More

Sometimes Nothing’s A Real Cool Hand

For those of you who are movie buffs like me,  you’ll know that one of the truly greatest films of all time is Cool Hand Luke,  the titlecharacter having been played by Paul Newman in one of his  finest  roles.  If you haven’t seen it, see it. What a great flick. The Paul Newman  character is a prisoner on a … Read More

The Right Way to Adopt a New Options Strategy for Your Playbook

In our last blog post we discussed the reasons that options traders should take it slowly when adopting a new  income strategy. Here are some simple steps you can take  to assure that your adoption of a new options strategy is sound: Communicate with  the developer of the strategy and see if he or she is still actively trading the … Read More

Options Trade Initiation: Why Patience Pays Off

When   developing   traders  enter into  income options strategies,  there is   a   tendency to  become  impatient  when   executing the opening trade.   The    trader   will   typically  put  an  order  in at  or around the mid-price but  often finds that the market  is  not  biting on that   price immediately.   This can create anxiety and a feeling of impatience in the trader,   arising   from the belief that,   since  almost … Read More

Irrational Pessimism

While being irrationally exuberant over a short winning streak of options trades leads many traders to recklessly ramp up their capital levels leading to devastating, or even fatal, losses, there is an opposite problem, which is not necessarily fatal, but certainly leads to futility. “Irrational pessimism” is when you lose confidence in your trading strategy when there is no good reason to … Read More

One Sure Way to Blow Yourself Up as an Options Trader (or What Happens When You Try to Steal Candy from the Wrong Baby)

In a speech delivered to the American Enterprise Institute in late 1996—in the middle of the formation of the dotcom bubble of the 1990s—then Federal Reserve Board Chairman Alan Greenspan coined the term “irrational exuberance” to describe an illogical optimism about the economy that was pumping up stock prices well beyond any reasonable level. History shows that he was correct, … Read More